We bring to you the latest edition of News Roundup: Indian Startup Stories Of The Week!
In one of the most important developments this week, Facebook-owned social media giant, WhatsApp, plans to partner with Startup India, an Indian government flagship initiative, under which the company will be investing $250K to fuel the startup ecosystem in the country. Through this initiative, WhatsApp will identify 500 startups and provide each of them with ad credits worth $500, thereby helping startups attract more customers and drive their sales.
WhatsApp’s parent company Facebook, in partnership with the Telangana government’s T-Hub, concluded the second round of its artificial intelligence (AI) accelerator programme. Through this accelerator programme, three startups were chosen, which include ftcash, Marut Drones and Innerhour. The startups selected will be guided and mentored by Facebook for a period of three months. It will help them build a go-to-market strategy, where it will help them increase their funnel conversion rates, picking up the sales model, taking the product to the entire market and building the company and more.
Former Supreme Court (SC) judge, Justice BN Srikrishna, who led the panel that finalised a personal data protection policy, suggested the Indian government should include new laws to regulate the monitoring of citizens by state agencies that use various technology platforms. The suggestion came after the WhatsApp Pegasus spyware controversy.
At the World Economic Forum, technology minister, Harsh Vardhan, said that technology and innovation can lead to sustained growth in the country. He further stated that India is working aggressively towards creating leaders in both industrialisation and technology developments. “Indian government realising the key driver for long-term economic growth is keeping a strong focus on science and technology,” he added.
MK Jain, deputy governor of the Reserve Bank of India recently raised concerns over the rising NPAs (non-performing assets) debts in the banking sector related to Mudra (Micro Units Development and Refinance Agency Ltd) loans. He urged banks to monitor the sanction of loans closely as unsustainable credit growth in the sector can risk the system. He further said that the Mudra loans, which were touted to be a saviour of SMEs and MSMEs, is going through an NBFC crisis.
Important Startup News:
Doodhwala Denies Allegations: All Is Well For FreshToHome
Since the transfer of its customer operations to the online marketplace and supply chain startup FreshToHome, Bengaluru-based Doodhwala was stuck in a dilemma over unpaid dues of vendors, employees and lost wallets of customers during the transit. However, FreshToHome CEO Shan Kadavil confirmed with Inc42 that the company has adhered to the terms and conditions of RBI regulations and has personally assisted customers for migration by getting on live calls and ensuring their wallet balance is transferred.
OYO Eyes CCD, Agarwal Gets His Share
- SoftBank-backed hotel aggregator startup OYO and British private equity firm Apax Partners have joined the race to buy a significant stake in the homegrown coffee chain Cafe Cofee Day (CCD), in likes with KKR, TPG Capital and Bain Capital, who were also in talks to acquire a stake in the company. Apparently, OYO and Apax have signed nondisclosure agreements (NDAs) with CCD’s registered firm, Coffee Day Enterprises Limited (CDEL).
- The founder of OYO, Ritesh Agarwal gets board approval buys back $1.5 Bn primary capital infusion into the company by SoftBank Vision Fund and Ritesh Agarwal’s RA Hospitality.
From The World of Ecommerce
- The homegrown ecommerce giant Flipkart rolled out a new feature called Flipkart Saathi to help users from Tier 2, 3 cities and rural regions navigate through the website with the help of audio and textual instructions. With this, Flipkart aims to target new consumers to come online.
- Amazon has collaborated with the Indian retail chain Big Bazaar to deliver fresh produce within two hours. Big Bazaar has already been fulfilling 300 to 1000 orders per day for Amazon’s Prime Now from 18 stores in New Delhi, Mumbai and Bengaluru. It plans to expand to 130 cities in the coming years.
- Amazon’s cloud-based entity, Amazon Web Service (AWS) recently added 22 new languages along with expanding its services to six new regions across the world. With this, AWS will now support a total of 54 languages and 2,804 combinations for the translation of languages. The language includes Afrikaans, Albanian, Amharic, Bosnian, Latvian, Slovak, Tagalog and others.
- The global tech giant Google plans to launch a new segment, under Google My Business, which allows SMEs (small and medium enterprises to create online stores) and the feature is expected to be launched in 2020.
- OYO reported a loss of INR 2384.69 Cr, a 5.5x jump from its losses of INR 360.42 Cr of FY18. The company has increased its expenses by 3.9x in FY19 with a jump in revenues by 3.5x. OYO’s operational revenue increased to INR 6456.9 Cr in FY19, a jump of 3.56x from INR 1413 Cr in FY18. The company’s operational expenses were INR 6131.65 in FY19, a rise of 3.9x increase from INR 1246.8 Cr in FY18. Employee benefit expenses reached INR 1538.85 Cr in FY19 compared to last year, where it was INR 266.3.
- The US-based multinational hospitality company Airbnb in FY19 witnessed a slight decrease of 7% in its revenue from 34.76 Cr in FY18 to INR 32.36 Cr during FY19. Profit wise, the company also saw a drop of 15.45% from FY18 and stood at INR 1.75 Cr, compared to last year, where it was INR 1.75 Cr. In terms of expenses, the company was able to reduce the expenses in FY19, which stood at INR 29.4 Cr, as compared to last year, where it was INR 31.8 Cr.
- Disney-owned Hotstar, in FY19, earned operational revenue of INR 1112.74 Cr, a jump of 94.7% from last year, where it was INR 571.5 Cr. This financial year, the company spent INR 1677.51 and incurred a loss of INR 554.38 Cr, however, in FY18, the company spent INR 965.69 Cr with a loss of INR 389.02 Cr.
- The online pharmacy startup, 1MG, as an individual entity reported a revenue of INR 54.16 Cr, a rise of 35.7% from INR 39.89 Cr in FY18. For FY19, the company saw a jump of 64% to INR 210.34 Cr from INR 128.2 Cr last year. Most of the revenue came from epharmacy business, where 1MG earned INR 39.7 Cr, a 71 % growth compared to FY18. where it was INR 23.23 Cr. Followed by ediagnostics and econsultancy advertisement, where it recorded operational revenue of INR 6.91 and INR 5.11 for FY19, respectively.
- Delhi-NCR based PolicyBazzar reported a loss of INR 9.42 Cr, which increased by 21.6x to INR 213.12 Cr in FY19. As a standalone entity FY19 reported a revenue of INR 312.3 Cr, a jump of 96% from INR 159.3 Cr in FY18. The company has spent more on advertising and promotion expenses which have grown 2.11x. Employee benefits wise, it reported a jump of 1.23x reaching INR 222.57 Cr from INR 99.39 Cr in FY18.
- WhatsApp’s business platform, WhatsApp Business reported a revenue of INR 6.84 Cr in its first year of operations. It spent INR 5.99 Cr for a year, which included employee benefits of INR 3.57 Cr. For FY19, the company reported a profit of INR 62.3 Lakh in FY19, compared to INR 5 Lakh loss in FY18.
The WhatsApp Saga
The instant messaging app, WhatsApp plans to roll out a self-destructing message feature to its Android Beta version. The company is still working on this update to provide more stable and bug-free experience to its users before releasing it to its 400 Mn Indian users in the country. The “delete message” feature might be available for group chats. The feature will come with a toggle switch button and users can choose a particular timeline, where the messages will automatically disappear. The duration includes one day, one week, one month and one year.
Cybersecurity, Data Breaches And More
- The Indian government’s cybersecurity agency, CERT-In (Computer Emergency Team) had requested WhatsApp for information and wanted to conduct an audit of WhatsApp’s security systems and processes to prevent any hacking from occurring in the future. The government said that it has been following up with WhatsApp to clarify the issue over the Pegasus spyware controversy.
- Google revealed that it had sent more than 12K warnings to users in 149 countries, who were allegedly targeted by government-backed attackers. According to Google’s report, in India, at least 500 users were vulnerable to hack. It further stated that 90% of these users were targeted using phishing emails, where a hacker tries to steal credentials such as passwords, account details and more. It also recommends high-risk users such as journalists, human rights activities and political campaigners a enrol in its Advanced Protection Program (APP).
- The Chinese smartphone maker OnePlus had announced a security breach that affected some of its users, including India and other countries. The company said that the user’s name, mobile number, email address and shipping address may have been exposed. It further claimed that the user’s payment information, password and account logins were safe.
- CERT-In, the Indian cybersecurity agency released an advisory for OnePlus users in India regarding the security breach. It said that more than 3K Indian users were exposed to the security breach, and asked the users to reset the password. It also urged users not to open phishing or spam emails, even though the link seems appealing.
- The Indian government’s health portal, Online Registration System (ORS) leaked data of 2 Mn patients, last year. A flaw in the ORS website allowed users to access patient details like name, address, age, mobile number, appointments, Unique Health Identification (UHID), partial Aadhaar numbers and disease details.
- New Delhi-based Chaayos recently introduced facial recognition technology at Chaayos as a method to collect photos of the customers. The technology might have been beneficial for the business, but customers raised questions about capturing facial images without seeking customer consent. This escalated so quickly that it called for the immediate introduction of a law to protect data privacy by human rights activists.
- CERT-In on Friday (November 29) issued an advisory on malicious third-party applications reportedly leaking personal data of Facebook and Twitter users. The third-party applications shared information of users to OneAudience and Mobiburn.
- The Noida cybercrime cell arrested 45 people working in a fake call centre setup. The group collected information about Flipkart and Myntra users via phishing. When caught, the gang was in possession of sensitive user data including names, email Ids, shipping address, customer buying history and order IDs among others.
Tackling the Most Rooted Problems In The Country
- Japan-based research firm Leave A Nest in collaboration with Indian venture capitalist firm Arc Ventures plans to set up a startup hub in India. For this, the companies will be investing an initial amount of INR 50 Cr to tackle environmental issues like air and water pollution and solid waste management problems in the country. After its partnership, the collaboration is called ArcNest.
- On Wednesday morning, the Indian Space Research Organisation (ISRO) launched a high-resolution earth observation satellite, Cartosat-3 along with 13 commercial nanosatellites from the USA. The satellites were successfully launched into their designated orbits. According to ISRO, the Cartosat-3 will be used for mapping applications, urban and rural applications, infrastructure planning, and coastal land use among others.
- Researchers from the Indraprastha Institute of Information Technology (IIIT) in Delhi in collaboration with Microsoft have developed an AI solution to track the movements and identify monkeys in the capital. The AI solution will be used to control the population or carry our sterilisation procedures of monkeys. It is used as an alternative to the physical tagging of monkeys — a humane solution to the rampant monkey problem in the city.
- ISRO in collaboration with Coal India is planning to develop a satellite that monitors air pollution in the country. Once launched, ISRO will be providing air pollution data to Coal India and the government. If Coal India and ISRO become successful in launching this satellite, India will be at par with the US-government space agency, National Aeronautics and Space Administration (NASA), which also worked in this domain.
From The Govt Corridors
- The central board of indirect taxes and customs (CBIC) decided to remove the provision that allows customers to receive duty-free ‘gifts and samples’ valued at under INR 5K from other countries. The decision came to light after Chineses ecommerce companies such as Shein, ClubFactory among others operating in India have all been alleged of misusing the provision.
- The central government will be introducing the Prohibition of Electronic Cigarettes (production, manufacturing, import, export, transport, sale, distribution, storage an advertisement) Bill 2019, in the legislature, to ban electric cigarettes in the country. The bill was introduced on November 26, 2019, and will be moved for consideration and passage in the Lok Sabha by the union health minister, Harsh Vardhan.
- The Indian government is now planning to push its plan to mandate digital companies to store data of Indian users in the country. The government believes that if WhatApp’s data was stored in India, it would have helped the authorities to carry out their own investigation related to the Pegasus spyware case.
- The Indian government recently announced to the revision of the intermediary guidelines before finalising the rules of the social media regulation to the Supreme Court early next year. Some of the proposed intermediary guidelines include setting up an office in India, having a nodal officer for coordinating with the government, fabricating information within 24 hours and tracing of unethical message sources and others.
- At the Global Exhibition on Services (GES) 2019, the joint secretary to the electronics & information technology ministry (MeitY), Rajiv Kumar said that the global software market is valued at $438 Bn and out of the total software business of $8.2 in the country, India’s exports stand at a mere $2 Bn. “By 2025, the software products will be a $1 Tn opportunities and India has a great chance to tap it.
- In another update, the Department for Promotion of Industry and Internal Trade (DPIIT) has proposed new income tax regulations to promote budding entrepreneurs in India. The tax regulation body aims to set up 50K new startups and 20 Lakh jobs by 2024. The new changes are a part of ‘Startup India Vision 2024.’
- According to the new proposal, DPIIT had suggested changes in two sections of the Income Tax Act — Firstly, the entrepreneurs will not be liable to pay taxes on the capital gain on transfer of residential property if the money is used to fund startups. Secondly, the founders’ shareholdings requirements should be reduced from 50% to 20%. In addition to this, DPIIT suggested that the mandatory holding period of the shares should be reduced from five years to three years, which will help startup raise funds with some flexibility
Govt To Regulate Cab-hailing Services, Ola-Uber Tussel And More
- The government is planning to regulate the cab-hailing services with a new set of rules. It is expected to be out for a public review sometime next week. The new proposed rules will be a slight modification to the Motor Vehicles Act, 2019, where the government may cap the commissions from the drivers to 10% of the total fare, followed by the surge price charges to 2x the base fare, depending on the demand from the customers.
- Ola’s CEO, Bhavish Aggarwal, gives advice to startups about gaining stability during the expansion phase of the company and not falling prey to large MNCs. He suggests entrepreneurs to always stay grounded to their values, visit the floor operations frequently and focus on what Japanese call ‘gemba’.
- The cab-hailing company, Uber has been barred from operating in London after Transport For London (TIL) discovered drivers with fake identities on the company’s app. Ola, taking advantage of the situation has deployed over 50K drivers in London to provide mobility services in the country.
- As part of the restructuring and redesigning the organisation, Ola will lay off 5-8% of its staff, accounting for around 350 employees, of the total 4.5K employees. Ola told Inc42 that the company is optimistic about cutting down losses further and aims to go public in the next 18-24 months. Slowly, many more employees will be transitioned to other parts of Ola’s business, including Ola Electric, Ola Food among others.
What Food Delivery Companies Are Up To?
- The cab aggregator platform Uber is reportedly looking for buyers to sell its loss-making food delivery business UberEats. After Swiggy declined, Zomato is in talks to acquire UberEats for $500 Mn. On the other hand, Uber is also considering to invest in Zomato in the current $500-600 Mn funding round. According to various media sources, the deal size between the two companies is expected to change.
- The Indian Hotel and Restaurant Association (AHAR) urged all the restaurants in Maharastra to opt-out of Zomato’s Gold Delivery service. The organisation highlighted that the service impacted the profit of the restaurant partners. It also stated that it’s Gold service has increased the number of unauthorised restaurants listed on the platform for delivering food.
- Zomato to run app installation ads campaigns that show after every food delivery orders are confirmed by the user. Through this, the food aggregator plans to monetise each order with app download ads. Currently, the company has tied up with at least four Indian startups, which include MoneyTap, Cred, Licious and Unacademy as seen by Inc42.
- The cab aggregator platform Uber is reportedly looking for buyers for selling its loss-making food delivery business UberEats. Zomato is in talks to acquire UberEats for $500 Mn. On the other hand, Uber is also considering to invest in Zomato in the current $500-600 Mn funding round. According to various media sources, the deal size between the two companies is expected to change.
From The World Of Fintech
- Truecaller plans to capture the Indian fintech market by launching its new credit business feature in 2020. Once launched, Truecaller will be offering microfinance and loans to an under-served market in India.
- Ola’s parent company ANI Technologies had reportedly decided to separate its fintech business Ola Financial Services as an independent entity. Through this, Ola Money will now be directly competing with the likes of Paytm, Phonepe, Amazon Pay and Google Pay.
- Amazon’s payments platform, Amazon Pay adds new services and features to its platform, where users can now book bus, train, and hotel, both on its app and website. The company collaborated with home-grown platforms like redBus alongside other hotels and train ticketing companies in the pipeline. In the past, the company had partnered with Cleartrip and BookMyShow to offer flight and movie ticketing services to its users.
From the Ecommerce World
- In reply to the demand of the Confederation of All India Traders (CAIT), Nirmala Sitharaman, instructed to initiate a high-level inquiry to probe the alleged avoidance of due tax liability by ecommerce platforms such as Amazon and Flipkart. CAIT had been reportedly alleging these ecommerce companies for being involved in unethical business practices such as deep discounting, predatory pricing, FDI violation, and tax evasion about others.
Updates From The Smartphone and Telecom Sector
- Chinese smartphone maker Oppo announced the integration of the government-developed DigiLocker with the latest version of its ColorOS operating system. The government platform enables users to secure users’ documents like driving licence, Aadhaar card, PAN card, Passport, among others.
- Mukesh Ambani-led Reliance Jio is inching closer to Vodafone Idea in terms of market share. According to the Telecom Regulatory Authority of India (TRAI), Reliance Jio was able to capture 30.26% of the market share, the percentage for Vodafone Idea stood at 31.73%. In August 2019, Vodafone Idea had a 32.03% share of the subscribers and Reliance Jio stayed at the second position with 29.74%. If the same pattern continues, Reliance Jio would emerge as the leader in the market share of the telecom industry in the country.
- The TRAI is trying to identify and solve consumer issues involving transparency of offers by telecom companies. The regulatory body is looking at non-telecom services such as Amazon Prime Video, Netflix and other OTT streaming platforms, where the offers are not transparent, as many customers have complained about being charged after the free subscription period.
- The minister of information technology and telecom, Ravi Shankar Prasad reportedly said that the government has no plans to reduce prices of 5G spectrum for the upcoming auction. Instead, it suggested the telecom players and operators use the existing spectrum of bandwidth ranging from 3.3 to 3.4 GHz and 3.4 to 3.6 GHz to launch 5G services in India, as there is still a huge amount of unsold spectrum for auction. However, the telecom operators and industry are demanding a revision of the 5G spectrum price, as it is too high.
- In another report by Ericsson, it said that the total mobile data traffic is expected to reach 22 exabytes (EB) per month by 2025. Interestingly, one EB is equal to the data size of one billion gigabytes (GB). The report further highlighted that the transformation towards advanced technologies will help India achieve 80% of mobile networks coming on 4G/LTE services by 2025.
Other Startup News
Niti Aayog’s Amitabh Kant Believes In AI-Based Startups
Amitabh Kant, CEO of Niti Aayog, in a Twitter post, listed AI-based startups that are focused on solving the problems of accessibility, affordability and availability. He listed sectors like healthcare, agriculture, education, natural language processing, retail and transport, where startups are utilising AI to solve the industry challenges. Some of the startups include Sigtuple, Tricog, Forcus, SatSure, Vassar Labs, Embibe, Niki.ai, MadStreet Den, Netradyne and Locus.
Foxconn And Salcomp Reviving Nokia’s Factory
The Finnish company, Salcomp, which is one of the key suppliers of chargers for Apple recently purchased Nokia’s idle factory for $30 Mn (INR 215 Cr) in Srperumbudur in Chennai. For the next three years, the company will be investing $300 Mn to start operations from this platform. With this investment, Salcomp plans to scale up its exports to about $2 Bn.
Foxconn, on the other hand, also started its manufacturing unit in Nokia’s Telecom Special Economic Zone (SEZ) in Chennai. The production has already started as a part of the 2019 Global Investors Meet (GIM) MoU. As part of the agreement, Foxconn will be spending INR 2,500 Cr investment in Tamil Nadu.
Snapchat’s Focus Shifts To India
The social messaging app, Snapchat now shifts its focus to the Indian market and looks at aggressively expanding its user base in the coming years. Previously, the company was more focused on richer markets like the US and Western Europe.